Madoff and common sense

[Spock]

Madoff is obviously a total scumbag-

but in some ways-I am starting to lose sympathy/empathy with his victims.

Local (Twin Cities) lawyer representing his victims-on the news last night-referenced clients who lost almost their entire life savings.

I suspect he was exagerating for effect.

However, I have seen other references to victims losing almost all of their fortune to Madoff. If so-that is just stupid.

Common sense (especially if you have a fortune in the first place) would not have you risk your fortune in one place.

Its that all eggs-one basket thing.

[gsabc]

Madoff is obviously a total scumbag-

but in some ways-I am starting to lose sympathy/empathy with his victims.

Local (Twin Cities) lawyer representing his victims-on the news last night-referenced clients who lost almost their entire life savings.

I suspect he was exagerating for effect.

However, I have seen other references to victims losing almost all of their fortune to Madoff. If so-that is just stupid.

Common sense (especially if you have a fortune in the first place) would not have you risk your fortune in one place.

Its that all eggs-one basket thing.

But I thought greed was good.

I keep wondering if the $50 billion that they mention is actual losses, i.e., the money that the victims put in and can't get back out, or the paper losses, i.e. what Madoff CLAIMED they had in their accounts.

Good quote in an editorial for one of my trade magazines: "When people who are much smarter about money than you are get taken for billions, you may as well throw in the towl on the idea of 'smart investing.'"

[MarleysGh0st]

There were certainly other individuals and firms marketing these investments, for the commisions they received, who were likely persuasive in getting people* to invest. I'm still waiting to hear who else shared responsibility for creating and covering up this ponzi scheme. I find it hard to believe that Madoff handled all the bookkeeping himself, without someone else double-checking it.


*There are some union locals in this area who also lost big chunks of their pension funds in this scam. All believing they were doing good for their members by getting good market returns.

[gsabc]

Or throw in the towel. Note to self: check spelling BEFORE hitting submit.

[silverscreenselect]

Some of these people did not invest directly with Madoff. Their hired their own financial advisors who in turn invested their money largely or exclusively with Madoff.

To what extent is a person who is not a sophisticated invetor be required to double check what the professional he has hired has done?

[Spock]

Some of these people did not invest directly with Madoff. Their hired their own financial advisors who in turn invested their money largely or exclusively with Madoff.

To what extent is a person who is not a sophisticated invetor be required to double check what the professional he has hired has done?

A corollary of the old saying that I cited earlier-don't put all your eggs in one basket is

-If you put all your eggs in one basket-you better watch that basket.

[silverscreenselect]

Some of these people did not invest directly with Madoff. Their hired their own financial advisors who in turn invested their money largely or exclusively with Madoff.

To what extent is a person who is not a sophisticated invetor be required to double check what the professional he has hired has done?

A corollary of the old saying that I cited earlier-don't put all your eggs in one basket is

-If you put all your eggs in one basket-you better watch that basket.

From what I've been able to gather, Madoff used a number of feeder funds which fed money into his operation. These feeder funds often invested in a number of different places including Madoff's fund. Madoff's name was conspicuously absent in the paper trail that led to the ultimate destination (a red flag that was pointed out in testimony before Congress this week that the SEC ignored). Plus a good bit of the money that vanished was invested by pension funds, and, of course, the individual investors had no say whatsoever in what happened to these funds.

Bottom line is that a number of individual investors, many of whom were relatively unsophisticated, had investments that looked reasonably diversified on paper. The people with whom they invested, who were sophisticated financial professionals
who should have known better, failed to do their jobs (many of these people will be sued along with Madoff, and there is a better chance of collecting from them than Madoff, since they are still in business and have insurance that should cover their negligence).

[Spock]

This quote from one of the articles about the Madoff list cracked me up today. I suspect Mr. Phillips is being facetious.

""The fact that it includes so much personal information, including home addresses, is sparking interest from the capitalist-minded. "This is the best prospecting list ever," says Ken Phillips, who runs RCG Capital Advisors, a Boulder, Colo., fund that invests in hedge funds. "You've got the names and addresses of a whole bunch of rich people who don't demand much accountability.""

[MarleysGh0st]

This quote from one of the articles about the Madoff list cracked me up today. I suspect Mr. Phillips is being facetious.

""The fact that it includes so much personal information, including home addresses, is sparking interest from the capitalist-minded. "This is the best prospecting list ever," says Ken Phillips, who runs RCG Capital Advisors, a Boulder, Colo., fund that invests in hedge funds. "You've got the names and addresses of a whole bunch of rich people who don't demand much accountability.""

Cue the Nigerian spammers with their "We've got your payment ready from our international scam compensation fund ready for you" boilerplate!